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Homework answers / question archive / PLEASE TAKE NOTE OF THE FF

PLEASE TAKE NOTE OF THE FF

Accounting

PLEASE TAKE NOTE OF THE FF.:

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P corporation, an SME, paid P3,000,000 for a 90% interest in S Company on January 1, 2019. The stockholders of S Company included share capital of P2,000,000 and retained earnings of P1,000,000. Of the excess of total consideration (purchase price plus NCI) over book value, 60% is attributable to undervalued inventories and the remainder to goodwill. All inventories are sold in 2019. Also, on April 1, 2019, P sold an equipment to S for P300,000 (carrying value is P250,000 with remaining life of 5 years). S's net income for the year is P522,500. How much is the NCI at the end of 2019? *

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361,333.33

Step-by-step explanation

  Total Parent NCI
Consideration   3,333,333.33    3,000,000.00      333,333.33 
Book Value of the Net Assets   3,000,000.00    2,700,000.00      300,000.00 
Excess       333,333.33        300,000.00        33,333.33 
   Inventory     (200,000.00)     (180,000.00)     (20,000.00)
Goodwill       133,333.33        120,000.00        13,333.33 
   NCI 
Net Income          52,250.00 
Amortization       (20,000.00)
Unrealized Gain - Upstream         (5,000.00)
Realized Gain - Upstream              750.00 
Net Income          28,000.00 
NCI, beg       333,333.33 
NCI, Dividend                        -   
NCI, Net Income         28,000.00 
NCI, End       361,333.33 

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